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FEBRUARY 2004 |
IN THIS ISSUE
MAIN FEATURE The Threat to Food Security : Peril to Both Iowa, Telengana By Sripad Motiram, Vamsi Vakulabharanam and Vijay Prashad GLOBAL TRADE Made in India : Retooling a Brand By Siddharth Srivastava SOCIAL JUSTICE A Different Kind of Desi : NRIs at the World Social Forum By Tom Hayden Publisher’s Note • Infotech India U.S. Outsourcing Backlash: India Slams Senate Bill Online Wedding Bazaar: ShaadiTimes.com • The New American Century Westerners Eye India • Pravasi Bhartiya Diwas • BBC: Roadshow to Rural India NCM: Bush Immigration Proposal • Legal Issues: Traveling to South Asia Community News in Brief: Forum on Patriot Act... Star in Biomedical Engineering... Memorial Service for Uday Singh... State Controller Meets Auto Review: 2004 Volkawagen Touareg V8 • Bollywood • Tamil Cinema Recipe: Paneer with Tomato Gravy • Horoscope |
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Publisher's Note
In this issue we step back aside our usual interest in information technology and look at an critical to sustainable human survival: food. Three scholar-activists make an impassioned and compelling case that poverty and hunger India is not simply due to backwardness. They argue that a rigged trading system that lopsidedly favors corporate agribusiness in the developed countries puts India, and other developing nations at a huge disadvantage. That’s not all; even in the U.S., the beneficiaries of huge government largess are not small farmers at all; notwithstanding billions of dollars of subsidies, the number of U.S. farmers is shrinking as more and more of agricultural commodities go into the hands of a handful of global giants. India may have made the world sit up and take notice with its IT capabilities, but who would have thought the “Made in India” brand is worth global respect? Our intriguing report says that Indian manufacturers have recently won the world’s most coveted quality control prize, Japan’s Deming Prize (something that has eluded China), and companies ranging from Swedish automaker Volvo to U.S. retail giant Walmart are rushing to India to explore manufacturing. The World Social Forum in Mumbai attracted about 100,000 activists from all over the world. Indian Americans went there, too. We look at what that means, and also offer an excerpt of an address by activist author Arundhati Roy at the WSF. Typically provocative and trenchant, it presents views that we may not always agree with, but Roy’s opinion is a valuable counterpoint to the increasingly one-sided intellectual monoculture in the U.S. that blindly champions globalization and the neoliberal Washington consensus. |TOP|
MAIN FEATURE
The Threat to Food Security Peril for Both Iowa, Telengana - By Sripad Motiram, Vamsi Vakulabharanam and Vijay Prashad What have farmers in Iowa and Telengana got in common? A whole lot, argue economists Sripad Motiram, Vamsi Vakulabharanam and political scientist Vijay Prashad, who blame a rigged economic system stacked in favor of global corporate agribusiness and the West that is squeezing the small farmer in Iowa and crushing the landless farmer in India. This article is excerpted from the booklet “Iowa is Not Far from Telengana" Some Arguments for Food Security in India” by the authors, published by the Working Group on Food Security. The full text and author contact information is available at the Web site of the Working Group on Food Security at: http://www.geocities.com/wgfs2004/ Far be it for us to go against this trend and argue against the tangled agricultural history of our planet: India and America will continue to trade and trade they must. The current process known as “globalization,” however, is actually corporate globalization, because it does not operate for planetary welfare, neither in the Indian region of Telengana nor in the U.S. state of Iowa. Between 1998 and 2002, over a thousand farmers in the region of Telengana committed suicide. In the United States, according to the Centers for Disease Control, the highest rates of suicide take place in the states with the largest farm populations: the Rocky Mountain states, the Dakotas, Iowa and Florida. Small farmers and farm hands are killing themselves. Why is this? Globalization in agriculture works against those who work the soil. Farmers and farm hands do not own the bulk of farm production, and certainly not the major profit-generating part of the agro-business industry. Whether in India or the U.S., those who work the soil for those who own it have been vulnerable to the fixed game of globalization. In the relationship between nations with regard to agriculture, double standards are the order of the day. The World Trade Organization and the main advanced industrial states (the G-8 or Group of Eight countries, including Canada, France, Germany, Italy, Japan, Russia, United Kingdom and the United States) pressure the Third World states to reduce government support for farmers and open their agricultural economies to the rest of the world. The G-8/WTO argue that subsidies and price controls “distort” the market and contribute to the poverty of places like rural India. Meanwhile, within the G-8, the governments provide a high level of support for agriculture and they keep their economies closed to agricultural products from the Third World. A significant fall in the incomes of the poorer farming population in India can be directly traced to the farm-subsidy and tariff structures that exist in the G-8 countries, most notably the U.S. The subsidy regime has allowed large agro-businesses to dominate the world agricultural industry, and create misery not only for those who work the soil in India, but also in the U.S. Many U.S. small farmers have lost their lands and livelihood to banks and agro-businesses who flourish on the world market, mainly because of their economies of scale, their use of industrial science on the fields and the considerable subsidies and tariff support they receive from the G-8. The WTO’s ally in the destruction of older schemes for food security is the International Monetary Fund. Since 1991, the IMF in India has pushed a structural adjustment policy that demands that the state reduce its support in the production of agricultural goods and in its consumption. As the state withdraws from the agricultural arena, agro-businesses enter and decimate the security of ordinary people. If there are now less well-paid jobs, there is also less food to eat. In the 1960s, the Indian government instituted a food procurement and distribution system known as the Public Distribution System. The PDS system stabilized food prices by the purchase of food grains at a fixed price from farmers. That food then entered the homes of farmers and workers through Fixed Price or Ration Shops. The crackdown on PDS in the last decade has produced dire results both in rural and urban India. Not only can small farmers not rely on fair prices for their products, but workers across the country cannot rely upon fair price shops for their goods. Market distortions like the U.S. subsidy regime and the privatization of credit markets directly cause the suicides of farmers around the world. In this sense, in the new global agricultural arena, Iowa is not far from Telengana. Farm Subsidies in the U.S. One result of this has been the decline of the family farm, where income is currently just above $23,000. Between 1994 and 1996, 25 percent of hog farmers, 10 percent of grain farmers and 10 percent of dairy farmers went out of business. The Bureau of Labor Statistics projects that between 1998 and 2008 the number of family farms will decrease by over 13 percent. Meanwhile, the agricultural industry continues to concentrate in the hands of a few monopoly firms. Four firms control more than half the poultry industry, four others control more than 80 percent of the beef industry. Two firms, Cargill and Continental, control two-thirds of the world’s grain. Ten firms control over 84 percent of the world’s agro-chemical market. Today, 8 percent of the farms account for 72 percent of agricultural sales. These firms, not the market, control prices. The government’s subsidies go to these firms that control the market. In 2000, 63 percent of the $27 billion subsidy went to just 10 percent of the farm owners or agro-businesses. From the 2002 Farm Bill (size: $248.6 billion), the top 10 percent of those who receive subsidies rake in two-thirds of the subsidies, while the bottom 80 percent will have to rest content with a sixth of the subsidy pot. The New York Times offered the following analysis and rebuke: “The farms that benefit most [from the subsidy-tariff regime] are industrial sized. American small farmers are victims of federal agricultural policies, just like the African cotton growers, who cannot compete against the American product. American cotton thanks to subsidies often sells for less than it costs to grow. The real small farmer’s opportunities are limited by high land costs. The stream of subsidy dollars flowing from the federal Treasury about $20 billion [in 2002] has a way of turning arable land into welfare tickets. That’s why in 2001, despite low commodity prices and an ongoing exodus from rural America, farmland values in places like Iowa were hitting all-time highs. Subsidies inflate the price of land by an estimated 25 percent” (“The Farmland Bubble,” New York Times, Dec. 26, 2003). The number of farms in the U.S. has declined from six million in the 1950s to two million today an indication of the concentration of farmland wealth in a few hands. Plight of Indian Farmers Agricultural growth has been erratic since the liberalization of agriculture. In 2002-03, the growth rate is 3.1 percent. Rural unemployment has risen from 5.61 percent in 1993-94 to 7.21 percent in 1999-2000. Investment in agriculture, notably public investment, has become almost stagnant. Many of the crops grown by Indian farmers come to a market place where the prices for these crops are undermined by the agro-businesses and the subsidies they enjoy in their home countries. Take the case of King Cotton. Between 1999 and 2002, the U.S. agro-business share of the world cotton market grew to 40 percent from 25 percent. This was entirely because of the $12.9 billion subsidy paid by the U.S. tax-payer to the cotton industry. In the same period, India’s imports of cotton grew by almost 29 percent, while India’s production of cotton has fallen. The loss to Indian farmers from U.S. subsidies is calculated to be about $1.3 billion (in 2001). Apart from subsidies, agriculture in the Third World is additionally under pressure from trade restrictions and tariffs employed by the advanced industrial states. Tariffs on products like sugar and beef as well as on processed fruit and diary produce often exceed 100 percent. The tariff structure is “escalating,” or it increases for processed goods as opposed to raw materials. For example, a Latin American farmer who wants to export tomato sauce would have to pay a six percent higher tariff as compared to what s/he would have to pay if s/he exported raw tomatoes. The IMF policies adopted by the Indian government in 1991 have resulted in an increase in the input costs of agricultural production power, fertilizers and other such high-value items can break the farm. The change of agricultural credit policy has squeezed the ability of the small farmer to afford these inputs, and therefore has benefited the large agro-businesses whose access to credit leaves them invulnerable. The worst hit are the marginal farmers who have less than 2.5 acres. While they account for 72 percent of rural households, their share of agricultural credit has declined from 30 percent (1990-91) to 24 percent (1996-97). High interest rates are the bane of rural India, and many of those who have committed suicide did so to relieve their families of the endless cycle of debt. Faced with the enormity of the rural crisis, the reaction from the well-heeled is often to blame local officials for their disregard, a position on which journalist P. Sainath is trenchant: “Beating up on a district collector and other more lowly officials may serve the demands of drawing room outrage. It doesn’t begin to gauge the crisis Indian agriculture and those dependent on it find themselves in. For a decade now, the launch of harsh anti-poor policies has driven that crisis. But the media cry with fine but rare exceptions remains the same: It’s a failure in implementation. Reality: it’s the policy, stupid, not the implementation. All an officer has to do to be true in implementation now is to do nothing. That is the policy. The stopping of rural credit. The dismantling of the public distribution system. Gutting what remains of the public health system. Withdrawing the state from basic services.” To justify the attack on the welfare system, some of the well heeled make the argument that “you can’t make an omelet without breaking a few eggs.” After a decade of agricultural neoliberalism in India, one is tempted to say, “I see the broken eggs, but where is the omelet”? What is to Be Done? Reduce Subsidies and Tariffs in the advanced industrial states. One approach is to unmask the hypocritical subsidy regime within the European Union, the US and Japan that enables global agro-businesses to thrive at the expense of the small farmers and the farm workers. We need to demand an end to the subsidy regime that leads to the misery of our rural world. Similarly, we demand a reduction of tariffs in the advanced industrial states, so that Third World farmers can access these markets. Harness Agricultural Policy for People Not Profits. To argue for a symmetrical tariff-subsidy reduction around the world fails to see how the tariff-subsidy regime that used to operate in the Third World worked. While the tariff-subsidy regime in the G-8 is designed to promote the profit sector within agriculture, the tariff-subsidy regime in the Third World, in general, worked to develop the food security of regions. In light of a lack of a social security net in India coupled with the other structural problems that continue to plague the Indian economy, we feel that it is necessary to protect the operation of the Indian small farmer from the depredations of corporate agriculture. Better PDS. Food is a basic need. The signatories to the 1948 Universal Declaration of Human Rights agreed to the “right to adequate standard of living,” which in the 1966 International Covenant on Economic, Social and Cultural Rights was elaborated to mean, “an equitable distribution of world food supplies in relation to need.” In the 1974 Universal Declaration on the Eradication of Hunger and Malnutrition, the world community agreed that, “Every man, woman and child has an inalienable right to be free from hunger and malnutrition.” Land Reform. Studies show that small farms are far more productive than big farms, that if those who work the soil also control it, then they are able to earn more income and make the land more productive for the long-term. We believe that land reform is a long-term solution to the problems of hunger, under-nutrition and poverty. Apart from increasing efficiency by decreasing farm size, land reforms, by improving nutrition, and improving the farmers’ ability to work, go a long way toward addressing the problems of productivity in agriculture. South Korea, Taiwan and China witnessed high growth rates and rapid development on the foundation of land reforms. Revamp Institutional Credit. We believe that the provision of credit is crucial for the food security of the rural poor the landless laborers, the marginal farmers and the small farmers. Before the structural adjustment of Indian agriculture, institutional credit schemes existed with many problems high transaction costs, low recovery rates and less desirable access of the funds to the rural poor. Instead of this, we have entered the world of micro-credit. By its very nature micro-credit cannot address the major credit problems in the rural sector. In the Indian context, it is fair to say that so far micro-credit has not proved to be a viable alternative to institutional credit in such important areas as technology adoption, irrigation and long-term investments. Necessity for Rural Women’s Rights. The weight of neoliberal policies has fallen heavily on rural women in the Third World many of whom have had to use creative strategies to feed their families at the same time as agricultural work has been taken away from them. Forced out of daily labor, many rural women farm workers are without income and as the PDS ends, they are now also without food. At an April 24, 2003 All-India Women’s Democratic Association convention on food security and employment, this large organization argued that food security, employment and political participation are interlinked, that without the one, it is infeasible to fight for the other. AIDWA member Gomti Sakhya described the atrocious living and political conditions for women in Rajasthan, notably the end to food security. Women from thirty two villages organized themselves and picketed the District Collector’s office to demand food grains. Limits of Public Action. The Nobel Laureate Amartya Sen and his long-time collaborator Jean Dreze have made a crucial intervention as critics of the current economic reforms. They advocate redistributive policies and an enhanced role for the state, especially in the key areas of health and education. Sen and Dreze have done more than anyone else to highlight the problem of food insecurity, hunger and starvation in India. They have offered a very strong rebuke of the current global inequalities and they see global solidarity as one way forward. We are in agreement with their criticisms. On the issue of asset redistribution, especially land reform, we are not as optimistic as them about the effect that public action can have on the creation of policy for a state dominated by the powerful. If a relatively more progressive state in the initial decades of independence did not carry out land reform, it is unlikely that the current right-wing state will do so. We are skeptical that a state that is fully committed to the current neoliberal economic policies will engage in redistributive policies. Therefore, we advocate the political fight for a change of government as the precondition for the creation of genuine food security in India. - Sripad Motiram is assistant professor in economics at Dalhousie University in Halifax, Canada. |TOP| INFOTECH INDIA Democratic senators Deanna Hanna and Terry Phillips said they were shocked when workers of EDS, a Texas-based company with offices in Colorado, which has a contract for computers for the state Human Services Programs, said that the firm is sending technical support jobs to India. Hanna said her measure (Bill 170) would require companies to keep workers assigned to state contracts in the United States. Phillips’ measure (Bill 169) would bar companies that relocate 100 or more jobs outside the United States from doing business with the state for seven years. The U.S. Senate had earlier passed a law barring doling out sub-contracts to India and other countries by American companies. “The three companies, leaders in their respective areas of operation, have joined hands to offer next generation e-banking solutions that are out-of-the-box and ready to be deployed,” the NASDAQ-listed, Bangalore-headquartered company said in a statement. The solution is based on Infosys’ Finacle, running on Microsoft .NET and Intel platform. This joint initiative was a result of efforts which these companies had been investing in optimizing the solution to deliver and maximize business value and return on investment to their mutual customers, Infosys said. “It has been clarified that if outsourced services are ancillary and auxiliary in nature and adequate remuneration is paid to the Indian call centre, then there shall be no tax on such foreign company as has outsourced its activity to India,” Finance Minister Jaswant Singh said while presenting the interim budget for 2004-05. This policy is on the lines of OECD norms and double-taxation avoidance agreements, he said. Singh said business process outsourcing has vast scope for employment generation. “The new IUC regime will come into effect from midnight. However, with regard to change in numbers by hitherto limited mobile operators now converted into unified service providers like Reliance and Tatas will happen gradually by March,” D.P.S. Seth, Member, TRAI, said. TRAI has specified IUC charges payable between two operators for usage of network, and it is up to the service providers to work out the tariffs based on margins. As of now, none of the operators has announced new tariffs under the IUC regime but industry sources indicated that additional burden on service providers, in terms of access deficit charge to be paid by them to incumbent Bharat Sanchar Nigam Ltd could be passed on to the subscribers. Earlier, the private telecom operators cellular and unified had raised concerns over BSNL’s approach of calculating inter-operator charges saying they have been using different pulse rate for making payments to other operators and separate pulse rate for taking payments on the basis of IUC. In this newly-created post, Venkatesan will have direct responsibility for Microsoft’s marketing, sales, operational and business development efforts in India, and will provide a single point of leadership for Microsoft India, in partnership with the leaders of Microsoft’s other business units, in working with policy makers, customers and partners, Microsoft said in a statement. Prior to joining Microsoft, Venkatesan served as chairman of Cummins India Ltd, it said. Microsoft operates four distinct business units in India: the sales and marketing subsidiary; Microsoft’s Indian Business Unit IT Development Centre in Hyderabad; the India Development Centre, also in Hyderabad, and the Global Support Centre in Bangalore. ”Venkatesan will provide strategic direction to all of Microsoft India and focus on the success of Microsoft’s partners and customers in India,” the statement said. (Agencies) Tatas were issued letters of intent for 12 circles last month but the company has signed a license agreement for 11, leaving out Madhya Pradesh. With this, Tatas would have a presence in 17 circles. The new licenses are for Uttar Pradesh (E), Uttar Pradesh (W), West Bengal, Kolkata, Bihar, Orissa, Rajasthan, Himachal Pradesh, Haryana, Punjab and Kerala. When contacted, Ashok Sud, chief regulatory officer of Tatas, said, “We have received licenses for 11 circles. For Madhya Pradesh, some additional documents need to be prepared and we will complete the formalities for MP also soon.” He said the company was contemplating to start services in all new circles within six to nine months from now. “We had started the planning for rolling out networks much before signing the licenses. Now we can place orders for equipment. We hope to start services within the targeted period of up to nine months,” he added. However, he declined to give investment estimates, saying final figures were yet to be determined. Launching the country’s first Campus Radio Station at Anna University here, he said “in a highly diverse country like India, where dialects and socio-cultural attributes change from place to place and from community to community, there is no better people’s medium than community radio.” Stating that nobody could deny that India had entered a new orbit of development under the leadership of Prime Minister A.B. Vajpayee, he said the entire world was noticing and acknowledging the rising stature of the country. Campus radio, Advani said, could be a very useful tool for enhancing the pedagogical capabilities of an educational institution. The country had the second biggest population of students in the world after China, he said. “We need to enrich this human resource through quality education. Today students everywhere and their parents are particular about the quality of education. Therefore, we have to harness new methods and new technologies to upgrade the standards of teaching to global levels in our colleges and universities,” he said. Recalling that the first experimental FM radio station began in 1977 when he was Information and Broadcasting minister, he said the other footnote was that “our government, which came into being riding on a strong anti-emergency wave, freed up All India Radio and Doordarshan from the shackles of political interference.” The Rs. 1.5 million radio station was built by the audio vision research centre of the university. This project will help improve customer service levels and reduce its cost of customer services operations significantly and quickly. The project, started 24 months ago, went live at the end of November 2003, a Wipro release said. The system would enable Prudential customer service agents to have a consolidated view of the customer and quickly conclude a significantly larger number of transactions. Prudential would be able to deliver on the brand promise of “One operation,” reduce costs and deliver even better customer service, Wipro said. The project was built on a Web-based, three-tiered architecture and involved integrating over 20 different technology components. The solution spanned 10 legacy applications, including those performing customer administration, workflow and contact management, the release said. Initially, this facility would be made available as a pilot project for such trains departing from Delhi area, Railway Minister Nitish Kumar announced while presenting the interim rail budget in the Lok Sabha Jan. 30. A pilot project enabling passengers traveling on select Shatabdi Express trains to get reservations booked through Internet and occupy their reserved seats on the basis of a computer generated slip was announced by Kumar as well. He said the commencement of the pilot project is proposed to cover a new horizon, namely the ticketing of the reserved segment. Kumar also announced the facility of train reservations through mobile phones. He said the Indian Railway Catering and Tourism Corporation has developed technical ability to enable cell phone operators to integrate their system with the Railways and this facility will be offered to all cell phone operators. “The expansion of communication aids and the extraordinary penetration of mobile phones in the common man’s life style cannot be ignored by the Railways,” Kumar said in his speech. The agreement gives rights to the Space Imaging to sell data from these two Indian remote-sensing satellites, an official release said in New Delhi. Under the pact, the National Remote Sensing Agency of the Department of Space, based in Hyderabad, acquires and markets the data in India, it said. RESOURCESAT-1 is the most advanced remote-sensing satellite built by the Indian Space Research Organization and was launched by India’s popular satellite launch vehicle PSLV in October last year. Antrix and Space Imaging have been working as partners to fulfill India’s vision of a global commercial Earth Observation Programmer, it said. Combined with the successful launch of RESOURCESAT-1 and Space Imaging’s worldwide user-base, its imagery is sure to gain maximum exposure across the global markets, it said. The Space Imaging has set up 19 ground stations in the past few years to access data from IRS-1C and IRS1-D. It feels that the quality of data from the RESOURCESAT-1 and the forthcoming CARTOSAT-1 will be much more superior and ensure the success of India’s Global Commercial Earth Observation Program, the release said.
GLOBAL TRADE
![]() Made in India: Retooling a Brand - By Siddharth Srivastava ‘Made in India’ no longer means shoddy outdated products made for a protected market as global heavyweights like Toyota, Volvo, Honeywell and Walmart look at India as a manufacturing hub, writes Siddharth Srivastava. Not too long ago the ‘Made in India’ brand epitomized all that was unreliable and shoddy a synonym for poverty and deprivation. Now things are beginning to turn around. The `Made-in-India’ tag is making a global splash. We are not talking here of Information Technology, BPO service segments or Indian film actress Aishwarya Rai being branded the most beautiful woman of the world. We are looking at the segment of Indian industry that matters the most for any economy but was always drew global suspicion as far as India was concerned manufacturing. IT helped India to achieve global recognition. Now, two million trained engineers in the country are infusing vibrancy in manufacturing companies many of them growing at 40 percent. First the facts from biscuits and veggies to automobiles and pharmaceuticals, Indian produced goods are breaking new frontiers. Export growth of cars, cigarettes, tobacco and motorcycles has topped 50 percent this fiscal year. For long, Indian manufacturing exports were largely restricted to components. There’s been a huge shift along the way: industry data reveals the export of finished consumer goods is making rapid strides. Automobiles, consumer durables, drugs, IT hardware and FMCG are all clocking double-digit revenue growth in the international market. Recently, five Indian companies bagged the globally acclaimed Deming prize, a touchstone for quality manufacturing. This prize is given to an organization for rigorous total quality management practices. China is yet to get such an honor. Eight more Indian companies are preparing for the 2004 Deming recognition. In addition, the Japanese Institute of Plant Management has rewarded 18 manufacturing plants in 10 Indian companies for excelling in Total Productive Maintenance this year. World-renowned TQM expert Prof Yasutoshi Washio predicts that Indian manufacturing quality will overtake Japan in 2013. U.S., Europe and Japan are seeking outsourcing opportunities through manufacturing supply chains from India. Toyota is establishing India as a source for transmission parts. Ford is sourcing engines from Hindustan Motors. Yamaha and Mitsubishi have announced plans to make India a global sourcing hub for 125 cc motorcycles. Volvo, Renault and Mack Truck want to develop Indian vendors for their global requirements. U.S. retail chain Walmart, through its global outsourcing office in Bangalore, will increase outsourcing from India from the current $1 billion to $10 billion in the next couple of years. It is looking at sourcing paints, automotive, sport goods, lawn and garden equipment and hardware among others. Honeywell, a $22-billion technology and manufacturing company, is finalizing its outsourcing strategy for aerospace products and services. Siemens has committed to make $500 million investments soon. Perhaps the most revealing figures have been thrown up by the automobile sector where passenger cars exports jumped 72.9 percent with volumes fast approaching 100,000 units. Scooters recorded a marginal 2 percent rise in domestic sales, but exports jumped 91.2 percent in the April-December period. Exports of motorcycles and step throughs have also spurted 52.6 percent with volumes surpassing 100,000 units in the first nine months of the fiscal. So, is India a brand new success story? Observers say this was bound to happen over time. It is a clear reflection that the Indian manufacturing sector is maturing from being just suppliers of components to final products. And as could be expected, multinationals are playing the key role in opening the global market with their established brands. In some cases products without a ready market in India are also being outsourced in large quantities for global customers. For instance, Whirlpool is sourcing coffee grinders for its buyers in North America even though it doesn’t have a ready market in India. Its export-oriented unit has become one of the main suppliers of the product for Whirlpool globally. This clearly is an indication that India is slowly catching up with the rest of the world and is being recognized as a hub for manufacturing products with the same low cost base as China. Some have compared the current phase as the same journey towards good quality that Japan embarked on after World War II. Other have described it as a tidal wave just building up. Global consultancy firm AT Kearney advises that India will have to bring down costs to improve its manufacturing competitiveness. The making of the “Made in India” brand has advanced alongside a metamorphosis of the popular global perception of India. The connotations attached to the Made in India logo are beginning to represent cool, savvy and fashionable. The idea of India as the ‘metro-spiritual’ finds favor with New Age Indians who are equally comfortable with the meditative and the material world. Hence it is no longer taboo to make your millions en route to moksha. Indeed, this success is a jump forward from the time that India was cocooned in the khadi of Nehruvianism to ‘Brand India’ inching up its way to become the flavor of the millennium. Examples abound, from the ubiquitous “hot” curry becoming the national dish of Britain (Former British Foreign Secretary Geoffrey Cook famously declared chicken tikka masala the national dish of Britain) to the nation with exchanging its begging bowl of yesteryear for a robust foreign exchange reserve of $100 billion or Kiran Karnik becoming the Forbes face of the year to the silver screen success of Bollywood, India is beginning to shine bright in the new ICE age of Information, Communication and Entertainment. But there is the other dark side. Thousands of illegal immigrants are willing to pay any amount to roost in foreign lands. These people belong to the India still untouched by the bounty that flows. They are the 26 percent of people who live in abject poverty and 42 million unemployed. The cruel paradox is that India has 18 million child workers despite 200 laws banning child labor. A prominent economist recently said that red tape has proliferated in government and each file has to make 267 stops before clearance. India has also been witness to numerous scams with politicians leading the stampede of the scamming brigade. If India has $100 billion as forex reserves, China has $400 billion. If India’s tourist industry has recorded 3 million people tourist inflow, Singapore alone accounts for 7.5 million. India, it must be said, still remains a sea of mediocrity dotted with islands of excellence. While there is no gainsaying the fact that a new beginning has been made, the real challenge is to expand these islands of excellence to encompass the entire country. Interested readers can find more information about IIBB at www.nvo.com/ghosh_research. - Siddharth Srivastava is a journalist based in New Delhi. |TOP| REPORT ![]() U.S. Outsourcing Backlash: India Slams Senate Bill By Siddharth Srivastava The recent U.S. Senate bill to curb outsourcing to countries like India has drawn a sharp reaction in India, writes Siddharth Srivastava. Indian industry and government have taken umbrage at the U.S. Senate’s curb on outsourcing government contracts that has barred doling out sub-contracts to India and other countries by American companies. At the same time the move is seen to be short sighted and populist with no appreciable impact on Indian current business interest. “The Senate Bill is a surprise,” Commerce and Industry Minister Arun Jaitley said, recalling his meeting with U.S. trade representative Robert Zoellick in June last year in which Zoellick had termed as “bad policy” attempts then being made some state legislatures to ban outsourcing of government contracts to countries such as India. “The actual volume of trade that we do with regard to outsourcing of U.S. government contracts is not a lot,” Jaitley said. “But it sends out a wrong signal at a time when the U.S. and India are working with others to lower trade barriers and establish fair trade rules,” he said. Echoing similar sentiments, Information Technology Minister Arun Shourie said that this was not the way Washington could advance in the backdrop of multilateral trade negotiations. “I feel this would worsen prospects of multilateral negotiations in trade,” Shourie said in a statement from Davos while advising the Indian companies to diversify their markets. Clarifying that India did not do much of the outsourcing business on U.S. government contracts, he said, “The direct effect would be little and Indian IT companies must learn some lessons from such moves.” “We must continue to move up the value chain and evolve such solutions and services which are good and cost-effective and Indian IT companies must diversify to other markets,” Shourie said. Indian industry, too, has reacted angrily to the passage of the Senate Bill and is seeing it as a case of protectionism building up in the U.S. ahead of this year’s presidential election. CII president Anand Mahindra termed the Senate action “unfortunate” and said, “Although normally such provisions are not changed, perhaps the U.S. president would reconsider this before signing the Bill.” Software industry association NASSCOM president Kiran Karnik said, “We are dismayed. Such legislation is not in keeping with the increasing globalization of trade which benefits all countries and is contrary to the spirit of free trade espoused by the U.S.” Although the full implications of the bill are not clear, it does seem that India will not be greatly affected by it. Only about 2 percent of India’s $10 billion software revenues come from U.S. government contracts, according to NASSCOM. Most outsourcing business is in the private sector domain. Most government contracts are already earmarked for American companies by existing laws. According to a report in The Times of India, what is not clear is the impact of the legislation in situations where foreign or foreign-owned companies have bid to win U.S. government contracts. For instance, part of the contract to build the U.S. government website Firstgov.com was won by a Norwegian company. Also unclear is whether the proposed law will affect foreign companies executing on-site work at U.S. government sites. Business groups in the U.S. are protesting the measure. “We want to grow the worldwide economy and create jobs. Isolating ourselves is not the way to do it,” director of communications from Business Roundtable Tita Freeman has said. Business Roundtable is an association of CEOs of the biggest firms in the U.S. and it recently urged the Bush administration not to be swayed by the public furor over the loss of American jobs overseas and not to espouse policies that would prevent American firms from getting jobs done cost-effectively, including outsourcing and subcontracting to countries like India, China or Russia. Reports also suggest that U.S. companies are expected to lobby against some of the provisions in the bill that affect their operations. Indian-American companies in the tech field, who win substantial amounts of government contracts often under special schemes for minority businesses, are not affected by the legislation, except where they might be sub-contracting the world to an Indian subsidiary. In India, at best only a few call center businesses that have state government contracts may be affected. Observers here say that U.S. lawmakers are being shortsighted and populist in bringing about such legislation and will be brought to their senses when enough qualified people are not found to do the job. According to a McKinsey estimate, for every dollar of U.S. spending in off-shoring, the benefit to U.S. could be in excess of $1.10 and to India it could be $0.33. That is, this is a zero sum game. On the next course of action from government to counter this, Shourie said: “The real action has to come from the firms who avail our services and they must know the consequences on their competitiveness if they are not allowed to outsource.” Shourie said the move by the U.S. Senate was an “important symptom.” “It may have implications on the chances of similar bills being passed by 8 U.S. states,” he said. In a broader context, the move is being seen here as a test of U.S. commitment to the ideal of free trade. It is the politicians, and not industry spokespersons, who are attributing America’s so-called jobless recovery to outsourcing. - Siddharth Srivastava is a journalist based in New Delhi. |TOP| SOCIAL JUSTICE ![]() A Different Kind of Desi: NRIs at the World Social Forum By Tom Hayden Young progressive Indian Americans at the World Social Forum mark a growing willingness of a new generation to challenge the conservative mindset of their elders, writes Tom Hayden. Indian-Americans are a prime target of opportunity for conservatives seeking political headway among people of color. The author Dinesh D’Souza, funded by conservative foundations, attacks campus liberals and affirmative action, becoming an Indian-American version of Ward Connerly, the conservative African-American who wishes to legislate color-blindness. In Louisiana this year, a 29-year-old, born-again Christian Republican, Bobby Jindal, was almost elected the first Indian-American governor of any state. But at the World Social Forum in January, young, progressive Indian-Americans have surfaced everywhere, all with stories to tell. The forum experience may be seen as a turning point in building their confidence to challenge the conservative leadership of their communities, according to one of them, Rinku Sen, 37. Sen, a Brown University graduate, directed the Oakland-based Center for Third World Organizing before becoming the publisher of ColorLines magazine. She came to the U.S. with her parents in 1972, part of the wave of Indian professionals encouraged by 1965 immigration reforms. “We grew up in white suburbia,” she recalls, “with no desis to relate to.” She was encouraged by her professors to study literary criticism, but chose to do something about social justice instead. She became involved in student movements, then was trained by longtime organizers at the Midwest Academy. Last year she published her first book, “Stir It Up” (Jossey-Bass). Sen’s consciousness initially was radicalized by African-Americans and feminists more than other South Asians. As the Indian immigrant community became larger and more diverse, an identifiable constituency began to search for definition, including where they fit on the color spectrum. While there were only 387,000 Indians in the U.S. in 1980, estimates today are as high as two million still only six-tenths of one percent of the American population, but 16 percent of Asian Americans. D’Souza’s arguments extolling upward mobility would be favorably received by this first generation of Indian professionals, with nearly twice the median incomes and college degrees of other Americans. But the growing Indian community still experienced the color line, political isolation and, especially after September 11, hate crimes and hostility towards immigrants. They began to address their political invisibility, having only three elected official at state legislative levels when their population ratio should result in 45. For Sen, the World Social Forum has been a marker on her journey. “It’s a perfect mix of my identities. It’s about my political work. About spending time with my family and not feeling the divisions of identity. I pass as all Indian, it’s important to have that i |